Transcript Document 7344726

Three Strategies For
Managing Fast Growth
Week 9
Fall, 2005
Prof. Dowling
Three Strategies For
Managing Fast Growth
George von Krogh and
 Michael A. Cusumano

Three Strategies For
Managing Fast Growth

Growing strategically
Good growth plan
 Product and market combinations
company will pursue
 Size the company hopes to achieve
 Know-how and organizational
structures that will support expansion

Three Strategies For
Managing Fast Growth

Fast-growing companies

Growth achieved by:
• Scaling
• Duplication
• Granulation
Three Strategies For
Managing Fast Growth

Scaling: Doing more of what you’re
good at
Invest aggressively
 Specialize and standardize
 Hire the right mix
 Adapt the structures
 Find ways to learn from customers
early
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Three Strategies For
Managing Fast Growth
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Is scaling the right strategy?
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It works best when:
• The market is potentially large enough for
rapid growth in a focused product line
• The product creates unique value in the
customers’ view
• The company can distribute products
widely at low cost
Three Strategies For
Managing Fast Growth

Duplication: Repeat the business
model in new regions
Balance standardization and
adaptation
 Hire flexible, independent managers
 Duplicate key parts of the
infrastructure
 Duplicate entrepreneurial knowledge
 Be aware of the limitations
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Three Strategies For
Managing Fast Growth
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Is duplication the right strategy?

It works best when:
• The business requires physical presence
and the company can repeat its business
model in new geographic markets
• There is a need for better distribution
• The company can adapt its experience in
product development, manufacturing and
marketing approaches fairly easily
Three Strategies For
Managing Fast Growth

Granulation: Growing select business
cells
Balance the old and the new
 Balance the informal and formal
 Evaluate and monitor
 Learn from customers, partners and
competitors

Three Strategies For
Managing Fast Growth

Is granulation the right strategy?

It works best when:
• Growth through scaling and duplicating has clear
limits
• A new technology is flourishing that could become
a new substitute for the company’s products or a
new business opportunity.
• The company is mature enough to monitor new
business activities, share knowledge internally
and learn effectively about new markets and
competitive scenarios.
Three Strategies For
Managing Fast Growth

Combining strategies
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For most early-stage companies, it is
best if managers implement the three
growth strategies sequentially, with
some overlapping.